ISSUE OF CERTIFICATE U/s 197

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NAND GOPAL SOMANI (Querist)
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16 October 2010 An NRI proposes to sell residential property in India and wishes to claim exemption U/s 54 in respect of the Long term Capital gains arising thereon.For this purpose, Form 13 is filed with Tax Dept.for certificate U/s 197 for non-deduction of Tax. The A.O.rejects the application on the grounds that Annex.I to Form 13 does not contain any relevant Schedule for this sort of case and hence,NRI is not eligible to apply in Form 13. Can anyone guide in this regard? Can i make a general application U/s 197.

CA. Chikkerur C R

CA. Chikkerur C R (Expert)
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17 October 2010 Dear Nand Gopal

Section 197 is as below & as per reading "Certificate " can be issued for TDS related Incomes to charge less TDS/No tds. However Capital gain will not fall under any category of TDS sections -192,,,,194I. So AO is right

CERTIFICATE FOR DEDUCTION AT LOWER RATE.

(1) Subject to rules made under sub-section (2A), where, in the case of any income of any person, income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of section 192, 193, 194, 194A, 194D, 194-I, 194K, 194L and 195, the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be, the Assessing Officer shall, on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.

(2) Where any such certificate is given, the person responsible for paying the income shall, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be.

(2A) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (1) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.

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